Case Note & Summary
The petitioner, Smt. Sangita wd/o Ajay Shah, filed a Criminal Writ Petition before the Bombay High Court challenging the territorial jurisdiction of the Judicial Magistrate, First Class, Nagpur, to try a complaint under Section 138 of the Negotiable Instruments Act, 1881 (NI Act) filed by respondent No.2, Sukrant s/o Harilal Shah. The core issue was whether the advent of the Real Time Gross Settlement (RTGS) system expanded the concept of 'drawee bank' under Section 138 NI Act. The petitioner argued that under RTGS, payments can be made by any branch of the same bank across the country, and therefore any such branch could be considered the drawee bank, conferring jurisdiction on courts where the cheque was dishonoured. The respondent opposed this, contending that RTGS merely expedites payment and does not change the legal definition of drawee bank. The court, relying on the Supreme Court's decision in Dashrath Rupsingh Rathod v. State of Maharashtra, held that the drawee bank is the branch on which the cheque is drawn, and the court within whose territorial jurisdiction that branch dishonours the cheque has jurisdiction. The RTGS system does not alter this principle. The court dismissed the petition, upholding the jurisdiction of the Nagpur court.
Headnote
A) Negotiable Instruments Act - Territorial Jurisdiction - Section 138 - Drawee Bank - The concept of 'drawee bank' under Section 138 of the Negotiable Instruments Act, 1881 is not expanded by the RTGS system; the drawee bank remains the branch on which the cheque is drawn. The court within whose territorial jurisdiction the drawee bank dishonours the cheque has jurisdiction to try the complaint. (Paras 5-10) B) Negotiable Instruments Act - Real Time Gross Settlement (RTGS) - Effect on Jurisdiction - RTGS is merely a system for expediting payment and does not alter the legal definition of 'drawee bank'. The branch that dishonours the cheque for insufficiency of funds is the drawee bank for jurisdictional purposes. (Paras 6-9) C) Criminal Procedure Code - Territorial Jurisdiction - Complaint under Section 138 NI Act - The place where the cheque is dishonoured by the drawee bank determines the court's jurisdiction. The petitioner's argument that any branch of the bank can be considered drawee bank due to RTGS was rejected. (Paras 5-10)
Issue of Consideration
Whether the advent of Real Time Gross Settlement (RTGS) system expands the concept of 'drawee bank' under Section 138 of the Negotiable Instruments Act, 1881, so as to confer jurisdiction on courts where any branch of the drawee bank (other than the branch on which the cheque is drawn) dishonours the cheque.
Final Decision
The petition was dismissed. The court held that the RTGS system does not expand the concept of 'drawee bank' under Section 138 NI Act. The drawee bank remains the branch on which the cheque is drawn, and the court within whose territorial jurisdiction that branch dishonours the cheque has jurisdiction. The Nagpur court had jurisdiction.
Law Points
- Territorial jurisdiction for Section 138 NI Act complaint is determined by the location of the drawee bank branch where the cheque is presented and dishonoured
- RTGS system does not expand the concept of drawee bank
- drawee bank is the branch on which the cheque is drawn
